Labor shortage

A recent article in The Wall Street Journal was about the severe labor shortage of skilled craftsmen. The article points out that firms attempt to deal with excess demand pressures in a variety of ways but without raising wages. However wages will eventually rise in the face of a labor shortage as the supply and demand shows. Firms often respond to changing market conditions rather slowly which looks exactly like what our employer is doing.

The article states that although much attention has been focused on the growing scarcity of service workers for restaurants, hotels and stores there is a far more serious labor shortage emerging for skilled blue collar craftsmen ranging from machinists, electricians, shipbuilders and bricklayers. However one wonders why there is a shortage of those while the navy is buying tons of ships and there are tons of new buildings going up.

Companies use different tactics which we would call bait and switch because they simply want cheap labor. Some companies laid off 97 employees, but offered jobs to 30 of the workers and in the end eventually hired only two. 

Another company extended its work week to 55 hours from the usual 40. The company also offered new recruits a ‘up to’ $1,500 ‘hiring bonus’ while neglecting its long time employees’ pay increases. The company admitted that it was part of the additional costs of training and must be shared by the long time employees which is nonsense.

Given the scarcity of labor one would think that the wages of skilled craftsmen would have risen sharply as companies competed for labor. However such has not been the case, a well known labor economist opined ‘what were seeing is the legacy of last economic recession and on going pressure of foreign competition’. It is ridiculous he says that a number of companies decided to operate shorthanded or institute mandatory overtime rather than raise wages on the hope that the labor shortage would prove to be temporary. This is what is happening to us because of our employer.

A company couldn’t get anyone to answer its ads for minimum wage, so it raised its pay to $1 above the minimum wage. Then it kept raising the wage till it was $3 above the minimum wage. This scenario to some degree resembles our employer’s behavior of wanting cheap labor.